Indigenisation: Zimbabwe Must Take Charge of Its Destiny

Published on 23rd February 2010

Violet Gonda moderates the debate on the new Empowerment and Indigenisation regulations recently passed by the government. The guests are businessman Mutumwa Mawere, economist Daniel Ndlela, the President of the Affirmative Action Group Supa Mandiwanzira and journalist Peta Thornycroft. Supa picks up from Mutumwa's observation that Zimbabwe needs to generate employment and encourage the masses of people who left the country to return - instead of introducing legislation that will add a significant burden to established businesses.

Mandiwanzira: I don't buy the argument that Zimbabweans are desperate to be empowered by jobs. We have realised that jobs will not take us anywhere. We must own our own resources and control our own destiny.

I'm aware that at Kamativi Tin Mine, a lot of tin was mined and used to make arms during the Second World War. If you go to Kamativi today, you will see some of the poorest of Zimbabweans. Why has that happened? No Zimbabwean or resident of Kamativi was involved in the company that exploited those resources to ensure that it benefits the local citizens afterwards. I'll not mention a multi-national platinum company that operates in Zimbabwe that has got platinum concessions. When the Zimbabwe government wanted to take a certain chunk of that platinum so they could do a trade deal with China, that company requested that they be paid 150 million US dollars. This is an asset that the company obtained simply by getting a Mining Commissioner's stamp. They never spent a cent. If they spent a cent, it was merely on exploration, which of course they've already recovered. But to give up a certain portion of their platinum mining block, which they were not utilising, they wanted 150 million US dollars.

Now our argument, which is supported by this Law and Regulation, is that indigenous people must be part of the ownership; have 51% and have a say. We have nothing to show for all the gold, all the silver, and all the nickel that has been exploited out of this country by the multi-nationals. If you drive to some of these mines, the roads are so terrible and yet significant resources have been exploited.

It is important to have significant ownership of businesses in Zimbabwe (especially those that relate to exploiting our natural resources) in the hands of the locals. The Zimbabweans in the Diaspora, three million of them, will need to come back here, not to be employed again but to own businesses. No foreign investor has opposed this. What I've heard are Zimbabweans who purport to represent foreign investors who say this will scare away investment. Let the foreign investors speak for themselves. This is the best thing that has ever happened after Independence in 1980.

Thornycroft: We got a foreign investor, Rio Tinto, who we interviewed in London about these regulations. They've been talking about a massive expansion. The bottom line on that expansion is an initial investment of 200 million dollars because it is quite a small mine and this certainly frightened them off.

Mandiwanzira: Rio Tinto will remain in this country; Rio Tinto will remain to invest that 200 million dollars even under the current circumstances because we have an asset that they want. It's an asset they will make profit out of. I can tell you, even at the height of Zimbabwe’s problems, companies like Zimplats were announcing putting 400 million dollars into this market. They shrugged off resistance by foreign governments against investing in Zimbabwe; they simply said: “We are doing business.” Now if it makes sense for Rio Tinto or for Zimplats, for any other to say I will still go into Zimbabwe, I can sell my 51% at market value and still continue to make money, they will stay in this market. Mark my words - they are going to stay in this market.

Thornycroft: There was a very long struggle between Zimplats and Gideon Gono at the Reserve Bank. It took about three years. They were being told to bank locally, when they had a signed agreement of 20 years previously - signed by the then Minister Edison Zvobgo, to allow them to have their offshore banking because they needed to spend these billions of dollars on imports. They couldn't have it in Zimbabwe because nobody trusted putting money in Zimbabwe. It ended up OK, from what I gather. Whenever we talk about mining, we need to remember that an enormous amount of money has to be invested over a certain payback time. It takes years and years. A company has to be extremely sure. You can see what's happened in Katanga in the last couple of years. You had an enormous boom, it was also to do with the prices - but as they got less and less sure about more and more government taking over percentage of their companies, they’ve now reduced from about 70 mining companies to two or three that have survived. And those are the very biggest in the world and they're extremely worried.

Mandiwanzira: Zimbabwe’s Finance Minister is not happy at all that the mining industry in this country contributes only 4% to Gross Domestic Product but if you look at the kind of profits they are making, you cannot correlate the two. That's one; Secondly, you have international companies, multi-nationals operating in Zimbabwe, 100% foreign owned. They bank their money outside Zimbabwe. If they had banked locally, others could borrow that money to sustain their business hence solving the liquidity crisis in this country. They don't trust this market but they trust taking out the assets of Zimbabweans. It is absolutely wrong for you to come, exploit and bank money in foreign banks which do not benefit anyone, so we are simply saying if you have indigenous people owning these businesses, 51%, decisions that benefit Zimbabweans will be made.

Thornycroft: Supa, the Reserve Bank of Zimbabwe over the last five years has been dipping itself into peoples' foreign currency accounts, not individuals but companies, and helping themselves to it. They’ve been using it in the market for whatever reason and those companies haven't got payback. Think of what happened to the gold mines in the last five years, the few that survived. Zimbabwe has a very bad record, it's a difficult time for any investment anywhere in the world today, and its past record over say the last five, it's going to have to repair that record.

Mandiwanzira: That's quite patronising, that's quite patronising... The fact of the matter is that if you're operating in Zimbabwe, and you don't trust the environment, you might as well not be there. You cannot be coming into my house and you want to have a meal in my house and say but I don't trust you. So don't come and have that meal in the house in the first place.

Thornycroft: They were there already.

Mandiwanzira: ...you can go anywhere in the world and look for a country that has got the second largest proven resources of platinum, you will not find it, you will end up coming back to Zimbabwe. We are simply saying those benefits must accrue to the local people. I do not disagree that there were problems at the Reserve Bank, there were problems in the economy but I do not think that these dispensations for banking outside were given by Gono, I do not think that these dispensations existed only in the last five years, they have existed for a very long, long time and we are saying it must stop. What was the reason that was given for banking money outside, well they didn't trust the exchange rate, they didn't trust that their money would be safe, well we have an inclusive government here that has assured everyone that's it's no longer business as usual, it's now business unusual. So why don't we bring back that money at least it circulates within the Zimbabwe banking industry? Zimplast makes more than 20 million US dollars a month. If that money was banked in the local banking system, it would make a difference.